web
You’re offline. This is a read only version of the page.
close
Skip to main content

Announcements

No record found.

News and Announcements icon
Community site session details

Community site session details

Session Id :
Dynamics 365 Community / Blogs / The Dynamics Troubleshooter / Italian localization: sales...

Italian localization: sales tax book sections at year end in Dynamics365 Finance

Views (1)
Paolo Cecchelli Profile Picture Paolo Cecchelli 494
If also you, like me, have experienced the great pleasure of implementing Dynamics 365 for an Italian-based company (yes, that was ironic…) you know what sales tax books and sales tax book sections are. In a nutshell, every VAT-relevant transaction in Italy has to be recorded in a Sales tax book (Sales or Purchase) that serve as serve as the official record that the government uses to verify how much tax you collected from customers versus how much you paid to suppliers. Inside each book, each VAT transaction is furthermore classified in one “Subsection” that specifies a certain characteristic relevant to the business and/or the tax authority like Transaction type (“Domestic Sales" for operations within Italy and another for "EU Exports"), Business Unit (Physical or Online shop) or Document Type (customs; Invoices vs. credit notes).
Now, the initial setup of this logic is well explained by Microsoft in the official documentation (https://learn.microsoft.com/en-us/dynamics365/finance/localizations/italy/emea-ita-fiscal-books ) however what is not explained is what to do at year’s end with the sales tax book sections, because in Italy the common rule is to have the number sequences for each Sales tax book restarting from 1 each year therefore manual intervention is required.

In this blog post I will illustrate two options to manage the sales tax book sections at years’ end for two different purposes and will highlight the pros and cons of each approach. The difference between the two approaches depends on whether users need to post transactions using the previous year's and the new year's number sequences simultaneously.
Before delving into the two different approaches, below you can find a table illustrating the setup that will be touched in the two different approaches:

ItemCutoff approachParallel posting approach
Number sequenceCreate new for the yearCreate new for the year
Vendor invoice journalChange the existing oneCreate new for the year
Sales tax book sectionCreate new for the yearCreate new for the year
Number sequence groupChange the existing oneCreate new for the year
Chronological number sequenceN/ACreate new for the year

  1. The Cutoff approach
I have called this the “cutoff approach” because the assumption to implement this first way is for the users to stop posting invoices with the previous year sales tax book section and start using the new one.
At year-end in this approach the passages to do are the following:
  1. Number sequence
A new number sequence for the year has to be created, usually it contains a constant describing the purpose of the tax book section and the reference year (e.g.: Purchase Italy of 2026 = PI26#######), it must be continuous:


Organization administration --> Number sequences --> Number sequences

  1. Vendor invoice journal (for purchase type sales tax book sections)
For the Sales tax books connected to a Sales tax book of the purchase type, the new number sequence must be connected to a vendor invoice journal in order to be chosen on the sales tax book section. In this approach, the new number sequence created must be chosen on the existing journal for the tax book section:


General ledger --> Journal setup --> Journal names

See that the sales tax book section reference goes away, it will be reinstated when we complete the following step.

  1. Number sequence groups
In the number sequence groups (accessible from the “Group” button in Accounts receivable, Accounts payable and, if needed, Project management and Accounting parameters) we have to change all the relevant references, referencing the new number sequence created for the year:

Accounts payable parameters/Accounts receivable parameters  --> Number sequences --> Group

Notice that also in this case the reference goes away, but it will be reinstated with the new one once the new sales tax book section is setup (see next paragraph)


  1. Sales tax book section
A new sales tax book section can now be created, referencing the number sequence created earlier:

Tax --> Setup --> Sales tax --> Sales tax book sections



We can now see that on both the vendor invoice journal and the number sequence group we have the new reference:

Accounts payable parameters/Accounts receivable parameters  --> Number sequences --> Group


General ledger --> Journal setup --> Journal names

From now on the users can use the new tax book section for posting.
Optionally is possible to set to Stopped all the previous year number sequence to avoid posting on the old number sequence

  1. The Parallel posting approach
The 'Parallel posting' approach allows users to post invoices to the previous year’s tax book and the new one at the same time. This is possible thanks to the form “Chronological number sequence”, that allows to automatically update the number sequence group at the time of posting.
At year-end in this approach the passages to do are the following:
  1. Number sequence
A new number sequence for the year has to be created, usually it contains a constant describing the purpose of the tax book section and the reference year (e.g.: Purchase Extra UE of 2026 = PX26#######)


Organization administration --> Number sequences --> Number sequences

  1. Vendor invoice journal (for purchase type sales tax book sections)
For the Sales tax books connected to a Sales tax book of the purchase type, a new vendor invoice journal must be created, the previous years’ one will continue to have the old sales tax book and number sequence and the new one will have the new ones:

General ledger --> Journal setup --> Journal names

See that the sales tax book section reference is blank, it will be reinstated when we complete the following step.

  1. Number sequence groups
In the number sequence groups (accessible from the “Group” button in Accounts receivable, Accounts payable and, if needed, Project management and Accounting parameters) we have to create a new number sequence group, referencing the new number sequence created for the year:

Accounts payable parameters/Accounts receivable parameters  --> Number sequences --> Group

Notice that also in this case the reference is blank, but it will be reinstated with the new one once the new sales tax book section is setup (see next paragraphs)


  1. Chronological number sequence groups
This setup is where the magic happens (this is the link to the official documentation https://learn.microsoft.com/en-us/dynamics365/finance/accounts-receivable/chrono-numbers ). By inserting the start and end date, together with the from and to number sequence group, is possible to tell the system to substitute on the sales and purchase order at the time of confirmation, packing slip and invoice posting the number sequence group on the header of the document (the one that will be used for posting):

Organization administration --> Number sequence --> Chronological number sequence groups

For vendor invoice journal that do not use the number sequence group, this does not apply because the sales tax book section is determined based on the one set on the voucher series.


  1. Sales tax book section
A new sales tax book section can now be created, referencing the number sequence created earlier:

Tax --> Setup --> Sales tax --> Sales tax book sections

We can now see that on both the vendor invoice journal and the number sequence group we have the new reference:

General ledger --> Journal setup --> Journal names





Accounts payable parameters/Accounts receivable parameters  --> Number sequences --> Group

From now on the users can use also the new tax book section for posting.


 

Conclusions
These are the main takeaways after having used the two approaches:
  • Planning: using the parallel approach is possible to plan for the new year in advance, by preparing all the setups while the users continue to post on the previous year;

  • Easiness of Setup: the cutoff approach is surely easier to implement. Parallel accounting requires more steps, additionally each new year you have to reference also all the previous years’ number sequence to avoid problems.

As a general rule, I am applying the one or the other according to each customer business process and request.   

That’s all folks, see you next time!

Comments